Europe
It’s been a disappointing start to the week across the board today as European investors take a risk off position after Friday’s “America First” President Trump inauguration speech on Friday, as European markets decline across the board.
The narrow one dimensional focus of the new US President’s comments, as well as his first executive actions in looking to renegotiate NAFTA and pull out of the Trans Pacific Partnership (TPP) has raised concerns that he is placing greater importance on protectionist measures than his pledges to implement tax cuts and infrastructure spending.
Talks about a potential merger between Bovis Homes (LON:BVS) and Berkeley Group has helped give a boost to the UK house building sector, however the rebound has been modest due to some scepticism that a deal would actually make financial sense.
On the downside Paddy Power Betfair has slipped back after they admitted that they would miss their profit forecasts due to a slowdown in sports betting and having to pay out on a Trump win, as well as their misguided decision to pay out on a Clinton win before the vote was even held.
The decline in oil prices is also weighing on the oil and gas sector.
Antofagasta (LON:ANTO) is the best performer today after being upgraded to “buy” by Citigroup (NYSE:C), though firmer copper and gold prices are also helping.
US
Even though US markets managed to rally into the close on Friday in the wake of new President Trump’s rather protectionist speech, overseas markets haven’t been anywhere near as sanguine, dropping back as currency markets gave their initial verdict sending the US dollar sharply lower.
This weakness has seen US markets also open lower as reports came out that the executive orders to renegotiate NAFTA and leave the TPP would be signed today.
On the earnings front oilfield services provider Halliburton (NYSE:HAL) posted a decent set of numbers for the most recent quarter, with profits higher than expected along with higher revenues, helped in large part by the recent rebound in oil prices. On the downside its international business fell short of expectations.
On the fast food front McDonalds posted Q4 numbers that beat expectations, on both the top and bottom line. Profits came in at $1.44c a share, above expectations of $1.31c, while revenues came in at $6.03bn.
FX
The US dollar’s weakness that was starting to manifest itself last week has accelerated today in the aftermath of Friday’s populist Presidential inauguration speech prompted further weakness, due to a lack of detail on what fiscal measures the new administration would undertake to boost the economy.
The US dollar index has slid to its lowest levels since the 8th December, just before the Fed raised rates.
The best performers have been the Japanese yen as US treasury yields fell back, while the pound has continued its recent gains ahead of tomorrow’s Supreme Court ruling on the triggering of Article 50.
Commodities
Crude oil prices have come under pressure again after US rig counts jumped sharply last week rising to 694, and their highest level since the beginning of last year.
If OPEC was hoping that production cuts would help push prices higher, it would appear the US shale producers have other ideas.
For all of OPEC’s talk that compliance is being upheld across the board at some point we can probably expect to see some cracks appear.
Copper prices are being underpinned by a weaker US dollar, but also by the prospect that we might see Chilean copper miners go on strike, as they look to vote on a pay deal.
Gold prices have also had a good day; hitting a two month high as uncertainty over future US fiscal policy continues to grow.
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